Find the annual income obtained from investing Rs 2500 nominal value in 8 percent stock that is quoted at Rs 106 in the market.

Introduction / Context: This problem focuses on the difference between nominal value, market price and annual income from a stock. The stock pays a fixed percentage dividend on nominal value, and that dividend does not change with the quoted market price. The question asks only for annual income, so we do not need to use the market quotation except to understand the context. Given Data / Assumptions:

• Nominal value of stock purchased = Rs 2500
• Dividend rate = 8 percent per year
• Market price (quoted) = Rs 106 per Rs 100 nominal value
• Dividend is always calculated on nominal value

Concept / Approach: The dividend formula for a stock investment is simple: Annual dividend (income) = Nominal value * Dividend rate / 100. Here only nominal value and rate matter. The fact that the stock is at 106 means the investor would have paid more than nominal value, but that affects yield, not the absolute dividend amount. Since the question is about annual income, we ignore market price in the calculation. Step-by-Step Solution: Step 1: Total nominal value of holdings = Rs 2500. Step 2: Dividend rate = 8 percent per year. Step 3: Annual income = 2500 * 8 / 100. Step 4: 2500 * 8 / 100 = 25 * 8 = Rs 200. Step 5: Therefore the investor receives Rs 200 as annual dividend. Verification / Alternative check: Think per Rs 100 nominal. At 8 percent, every Rs 100 nominal share pays Rs 8 per year. For Rs 2500 nominal value, the number of Rs 100 blocks is 2500 / 100 = 25. Income = 25 * 8 = Rs 200, which matches the earlier computation, confirming the result. Why Other Options Are Wrong:

• Rs 100: This would correspond to a 4 percent dividend rate, not 8 percent.
• Rs 150: Does not match 8 percent of 2500 and may come from a mistake in multiplication.
• Rs 250: This would match a 10 percent rate rather than the given 8 percent.

Common Pitfalls:

• Mistakenly using the market price 106 in the dividend calculation.
• Computing 8 percent of 250 instead of 2500 due to a missing zero.
• Confusing yield on investment with absolute dividend income.

Final Answer: The annual income derived from the investment is Rs 200.